UK - Essex County Council may be the first scheme to be investigated by the new pensions regulator, Independent Trustee Services claims.
ITS has warned the council that it will be “at the front of the queue” when the new regulator comes into effect in April, for breaching new moral hazard clauses.
The council is refusing to make good the scheme deficit at Essex Careers and Business Partnership – a venture it ran with Thurrock and Southend Councils. The £4m scheme which has 230 members was contracted out in 1995 and due to be taken back into the public sector last year.
But instead the company was put into member voluntary liquidation with active and deferred scheme members at risk of losing 60% of benefits as a result of a £6m shortfall.
ITS managing director Chris Martin told PP that the three councils had been contacted but Essex, the major shareholder, had refused to accept the position or meet with ITS.
Martin said: “We have warned Essex that the new regulator may use its retrospective powers to investigate the council. As far as we know this case would be at the front of the queue, but we hope the matter will not need to go that far and the council will make good the shortfall.”
Thurrock has met with ITS, and Southend is yet to respond.
Essex defended its decision to place the company into voluntary liquidation, claiming it was to protect the directors from accusations of wrongful trading, not to reduce the firm’s liability to the scheme.
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